|
|
 |
| |
| |
 Spread Betting -
explained |
| |
| |
|
|
|
 |
 |
| |
| Spread betting is just another form of
betting. Spread Betting is both innovative and old. It has taken the age old
philosophy of market trading and combined it with modern thinking towards
sports betting and financial indices. In reality the bets are very simple to
understand but their implications to the gambler are often more complex than
just winning or losing a predefined bet. Some terms put off the casual or
traditional punter but it is simple. Here we try to explain. Remember that
Spread Betting is volatile intentionally to give a wide range of possible
outcomes that the Spread Firm can more readily judge than the average punter.
You must be better than the average punter. Most of the time the results will
be sensible but just occasionally they will be extreme. Always consider the
extreme case when betting and bet within your limits. The world neatly splits
spread betting into two categories; Sports Spread Betting and Financial Spread
Betting. |
| |
Sports Spread Betting
Usually a closed system (not an infinite number of possible results), the
trading firm will offer a spread price around what it thinks is the most likely
result. So in cricket terms, if the firm thinks the "best fit" for Australian
first innings total is 330, then they will offer 320-340. You can go low by
selling at 320 or go high by buying at 340. If you sell at 320 for £1 and
the result is 220 then you win £100. As the innings progresses this quote
will change and it is possible to trade in running.
Go to the
Sports Spread Betting page or look at a
short glossary of terms. |
| |
Financial Spread Betting
Financial spread
betting is very similar to sports spreads. It is actually simpler to
understand, because you are wagering your money on an increase or decrease from
the current price, rather than how far the end result will be above or below a
given point. This is a product offered on most financial instruments. As an
example, you might be £10 per point that a currency will increase in
value. You use the offer price as this is a ‘buy’, and then deposit a
percentage of the total exposure in order to hold the position. For every point
the price moves in your favour, you win money, and vice versa. You can close
the bet at any time in order to resolve it, but generally, brokers charge a fee
for holding a position overnight.
Here is a short
glossary of terms. |
| |
|
| |
The
Single Index - The simplest form of spread betting is the Single
Index. What defines this type of Index is the fact that it is independent of
all other scores and events. Let us take for example a cricket innings score.
England are playing India in a test match and Hussain is quoted at 85-90 for
his two innings combined run total. The final result (make-up) of this index
will be his real combined two innings total.
[Example] You think he is
strong and likely to score more than 90 so you Buy at 90 for
£2.
Lets look at two cases:-
(1) Hussain scores 52 in the 1st
innings and 78 in the 2nd innings. His total (the make-up) is 78+52 = 130. Your
result here is (130-90) x £2 or another way of saying you win
£80.
(2) Husaain scores 37 in the 1st innings and 0 in the 2nd
innings. His total (the make-up) is 37. Your result here is a loss because he
scored less than 90 and so is (90-37) x £2 or another way of saying you
lost £106. |
| |
|
| |
Heads-Up Index - With the Single Index, the make-up was
determined by the actual result in real life. With two player indices the
Spread Betting Firms often (not always) like to spice things up by awarding
points for a particular result. For an example lets examine an 18-Hole match-up
between two golfers in a tournament. This is an index that is resolved in one
day.
Its Mickelson vs. Els in The Open on the first day. A spread firm
quotes Mickelson/Els 0-3 and the rules are 10 points for a win and 3pts per
stroke advantage in the actual score result. So if Mickelson beats Els by 3
strokes the make-up will be 10+(3x3) = 19. But if Els wins by 3 then the
make-up will be
-10 - (3x3) = -19. Its negative because
Mickelson is first quoted due to being deemed favourite by the firm. (You
have to get used to negative numbers in Heads-Up events).
If you made a
Buy at 3 for £5 (thinking Mickelson would win) and he won by 3,
your win would be (19-3) x £5 or £80. If he lost by 3 strokes your
loss would be the difference between 3 (the Buy price) and -19 (the
make-up). So you lose 22 x £5, or -£110. (Mathematically its 3 -
(-19) = 22)
|
| |
|
| |
| Table
A |
| World Cup
Group |
| Team |
Quote |
| Argentina |
13-15 |
| England |
10-12 |
| Sweden |
6-8 |
| Nigeria |
2-4 |
| 1st = 25pts, 2nd
= 10pts |
Multi Player Index - These are
presented as several players/teams competing in their own seperate market.
Sometimes, as in football World Cup groups, all the teams in the event are
quoted. For the rest just a selection of teams/players are chosen, as in London
football clubs in the Premier league. Regardless of these choices, spread firms
allocate points to the finishing positions within the specific
selections.
Example:
In the Table A on the right is the 2002 England
World Cup qualifying group. Points will be given to the winner and runner-up,
3rd and 4th get nothing. You must use your judgement to see whether the point
spread quotes are value to you as a punter. The abstract nature of this kind of
index is what makes it hard to judge but the Spread Firms have developed ways
to understand them. If you trust your judgement and think they are out of line
then bet.
In this case, if you think Nigeria have no chance then your bet is
Sell at 2 for £5 (maximum risk is if they come first you
lose (25-2) x £5 = £115). You also think Argentina are certain to
win the group (second will lose money on a Buy) so you Buy
at 15 for £5.
| Table
B |
| Result |
| Pos |
Team |
Quote |
| 1 |
Sweden |
25 |
| 2 |
England |
10 |
| 3 |
Argentina |
0 |
| 4 |
Nigeria |
0 |
The finishing positions and final
points allocated (the make-up) are shown in Table B. The
Sell bet on Nigeria wins (2 - 0) x £5 = £10. The
Buy bet on Argentina lost (15 - 0) x £5 = £75. The
two bets combined lost £65.
Advice With this type of index it always a matter
of judgement as to whether the quoted price represents value to you as a
customer. Argentina may have looked favourite to win the group but would they
win enough times if they were given 100 attempts, to let them average a score
of more than 15 points. If yes then its correct to Buy, if they average
in 13-15 zone then its neither a Buy or a Sell. If they would
average less than 13, then its a Sell. |
|
|
|
| |
| Glossary
of Sports Spread Betting Terms |
|
 |
|
| Buy |
This does not mean purchase in the
conventional sense. It means you are betting that the higher value of a quote
will be exceeded.
e.g. Lara cricket innings runs 40-45. You buy at
45 in the belief that Lara is likely to score more than 45. Your win is his
final score minus 45. Thus if he scores 98 your result is a win of (98-45) x
£stake. If he was out for 28 your result is a loss of (45-28) x
£stake. In these cases if you staked £1 you win £53 in the
first and lose £17 in the second. |
|
|
|
| Sell |
This does not mean selling something you
already own in the conventional sense. It means you are betting the lower value
of a quote will not be reached.
e.g Lara cricket innings runs 40-45. You
think he is out of form and Sell at 40. If he is out for 2 you
win (40-2) x £stake. But if bats well and hits 67 then you lose (67-40) x
£stake. In these cases if you staked £1 you win £38 in the
first and lose £27 in the second. |
|
|
|
| Spread |
The difference between the
Buy and Sell prices.
e.g. Lennox Lewis K.O.
Rounds 4-5. The spread is 1. |
|
|
|
| Mid Point |
The point value exactly between the
Buy and Sell prices. This may be used as the
make-up of a market when an event is stopped prematurely or there is a
withdrawl. |
|
|
|
| Make-up |
The point value attributed to a
player/team/fantasy-index at the conclusion of the event. This is the value to
calculate your final win/loss with from your Buy or
Sell position. |
|
|
|
| The Single Index |
One player index, not dependent on another
score.
e.g. One cricket batsman's total run score in an innings. |
|
|
|
| The Multiple
Index |
Several or many players/teams competing in
an event chosen to create a market. The highest player/team at the conclusion
is awarded the highest point value to calculate the resultant win/loss. The
second place is awarded a lesser point value to calculate the win/loss.
variable on the number in the market. There may be more places paid with lesser
values. |
|
|
|
|
|
| |
| Glossary
of Financial Spread Betting Terms |
|
|
|
| Bid |
As with traditional spread betting, there
is a ‘buy’ and a ‘sell’ price. The lower of the two is the
one that you ‘sell’ at, and this is known as the bid. |
|
|
|
| Gearing |
Gearing, also known as leverage is all
about the potential profits and losses that can be made in relation to the
initial deposit. With high gearing, a small outlay will allow much larger
profits to made than normal, though this also works in reverse. |
|
|
|
| Offer |
This is the higher of the two values in a
spread betting price, and is therefore the one that you ‘buy’
at. |
|
|
|
| Pip |
A pip is a percentage point, and generally
refers to the fourth decimal, though not in every case. |
|
|
|
| Point |
This is the increment by which a price
moves in your favour or against you. |
|
|
|
| Position
|
This is simply the active bet which you
have running. |
|
|
|
| Stop
Order |
A stop order or stop loss is a command you
give to your broker, which closes your position if you begin to make a certain
loss. It can also be used to lock-in profits. |
|
|
| |
|
|
| |
| Spread
Betting Firms |
|
Sporting Index
IG
Index
SportsSpreads
SpreadFair
Spreadex
City Index
Spreadco |
|
|
| |
|
|
| |
|
|
|
|
|
|
Main Menu
